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6 tips to help you save time on debt recovery.

We’ve said it before and we’ll no doubt say it again, when it comes to business finance… “Revenue is vanity, profit is sanity, but cash is king.” That’s why it’s so important to stay on top of your debtors and make sure you get your invoices paid on time.

As Chartered Accountants one of the things we’re most often asked by our clients is “How do we make sure we get paid on time?” So we thought we’d pop together a list of tips to help you reduce the effort you have to put in to debt recovery.

Remember prevention is the best policy, so know who your customers are and get a credit check on them.

Invoice as soon as your work is completed, or your product is supplied. Prompt invoicing means you’re less likely to miss the next payment cycle, particularly with larger companys.

Make sure your have payment conditions on your invoices. Either encourage prompt payment with a discount for payments made within a certain time frame or penalise late payers with overdue fees; but here’s the important part… Stick to your guns if your clients don’t pay on time. If you have the terms on your invoices yet don’t stick to them, you’re like the boy that cried wolf every time!

If your customers haven’t paid on time, stop supplying them. This will help leverage prompt payment and whilst this policy may cost you some business, it will also reduce your risk of being exposed to bad debt.

Don’t be afraid to ask… Have a credit control system in place. Follow up overdue accounts by telephone, and make sure you know who or what department to speak to in the debtor’s business.

Invest in some software that will ensure you credit control systems become automated. Take a look at Debtor Daddy which integrates with Xero and MYOB and promises that you can sit back, relax and let Debtor Daddy keep your receivables in check, automatically.